The approval of Monsanto's Bt cotton in India and the prospects for
approval of its RR soybeans in Brazil have given a psychological lift to
an industry on its uppers. Monsanto's president and chief executive, Hendrik
Verfaillie, has already been predicting earnings could rise in "double-digit
percentages" starting in about 2004 but admits that will only happen if
the public becomes more accepting of GE crops.
[http://www.biotech-info.net/seek_profits.html]

That's a huge 'if' that needs to be set against the backdrop of Monsanto's
$1.71 billion debt. Only a few days after Verfaillie's expressions of hope,
the company announced a further 5% contraction in its work force.

The sorry state of the industry is leading to an ever more desperate
consolidation, as reflected in the Aventis Crop Science-Bayer deal, and
a resolution to the costly Monsanto-DuPont cross-licensing dispute.

Bayer's Euros 7.3bn (Pounds 4.5bn) acqui-sition of the agrochemicals
unit of Aventis, its Franco-German rival, is expected to be approved by
European antitrust authorities - but only after the companies agreed to
substantial disposals.

People close to the case say the European Commission is set to clear
the deal within weeks after five months of tough scrutiny that prompted
Bayer to offer to dispose of important parts of the combined group with
sales of more than Euros 150m.

The German company is understood to have agreed to sell the US and European
rights to Fipronil, an Aventis insecticide considered by analysts as the
jewel in the crown of the group's agrochemicals unit.

The disposals agreed with Brussels are also believed to include the
rights to the anti-cockroach and anti-termite applications of an ingredient
for some of Bayer's biggest selling insecticides.

Analysts believe that BASF, Bayer's German rival, which was outbid for
Aventis Crop Science, is the front-runner to buy the products to be sold.

The extent of the disposals will surprise some industry experts because
Manfred Schneider, Bayer's outgoing chairman, last year said the company
might not have to sell assets to win regulatory approval.

The proposed sales will be a blow for Bayer but highlight its willingness
to complete the acquisition of high-margin agrochemicals at a time of sluggish
growth in its core pharmaceuticals business.

The Aventis deal - Bayer's biggest acquisition - will more than double
the German company's agrochemicals sales to about Euros 8bn and lift it
from sixth to second place in the global crop protection industry, just
behind Syngenta, the Anglo-Swiss group.

Bayer's offer of disposals is believed to have convinced the Commission's
competition department to clear the deal. The decision still needs to be
discussed with an advisory committee of the European Union's 15 member
states and the 20 commissioners. However, both the member states and the
commissioners usually endorse the opinion of their competition experts.

US competition authorities are also scrutinising the deal. People close
to the discussions said the two regulators had co-operated closely
on the Bayer-Aventis deal - a sign that the US watchdogs could also clear
the deal.

Bayer and the Commission declined to comment.

Fipronil is one of Aventis's newest and fastest growing products with
total sales of Euros 302m last year, expected to grow to Euros 500m in
the next few years.

Bayer is understood to have offered to divest the US and European crop
protection rights to Fipronil, which account for about half of the insecticide's
sales. The company will retain an option to license back the rights for
Fipronil's crop protection uses outside Europe and the US and for non-agrochemicals
uses. www.ft.com/bayer

NEW YORK -- Monsanto Co. (MON, news, msgs) said it is implementing a
restructuring that will cost as much as $124 million and includes work-force
reductions and consolidation of facilities this year.

The planned staff cuts would affect fewer than 700 people, or less than
5% of Monsanto's work force. The company had 14,600 employees as of the
end of 2001, a company spokeswoman said.

In a statement issued ahead of an investor conference in New York on
Thursday, the St. Louis-based crop-biotechnology company also said it expects
earnings per share, excluding items, to continue to grow in the single-digit
percentages for the next two years while regulatory approvals for its biotech
products work their way through the system. Growth will accelerate after
that, the company said.

Chief Financial Officer Terry Crews repeated the company's projection,
first made in February, for earnings per share growth of 4% to 6% in 2002
and 4% to 9% in 2003, excluding charges and the effect of new accounting
rules, beginning with 2002 results.

After that, growth is expected to accelerate in 2004 and beyond as Monsanto
receives additional regulatory approvals for biotech products and expands
use of its current biotech products in new markets, Mr. Crews said.

A survey of analysts by by Thomson Financial/First Call, which also
excludes items, calls for the company to earn $2.03 a share in 2002 and
$2.25 a share in 2003. Monsanto reported earnings of $1.80 a share in 2001.

Mr. Crews said the company had free cash flow of $183 million in 2001
and plans to more than double that in 2002 and increase it by an additional
10% to 30% in 2003.

"The strategy we're implementing also prepares us for double-digit earnings
growth in the medium to long term as we realize global expansion of current
and future products," Hendrik Verfaillie, president and chief executive,
said in a statement. "In the interim, the company will fine-tune its organizational
structure, including the rationalization of some facilities and a small
reduction in staff."

Monsanto is developing bioengineered seeds and pesticide products in
competition with market rivals such as DuPont Co. (DD, news, msgs).

Just this week, Monsanto and DuPont signed a cross-licensing agreement
and agreed to dismiss all pending lawsuits, resolving a number of old patent
disputes.

Speaking at the investors conference, Chief Operating Officer Hugh Grant
said the percentage of revenue coming from Monsanto's seeds and genomics
business will increase. That business accounted for 31% of revenue in 2001
but is expected to increase to 55% in 2007, he said.

The amount of crop acreage that has genetically modified seeds continues
to grow, Chief Executive Hendrik Verfaillie said. That acreage was 130
million last year, compared with 109 million in 2000. That amount was just
four million acres in 1996. Mr. Verfaillie attributed the increased acreage
to biotechnology decreasing farmers' costs while increasing yields.

Monsanto spent $560 million on research and development last year, Chief
Technology Officer Robb Fraley said. Of the research-and-development spending,
83% went to biotechnology and seeds, and 17% went to the agricultural/chemical
business, Mr. Verfaillie said.

Monsanto is keeping an eye on five regulatory approvals, Mr. Verfaillie
said. One of those is getting approval for planting Roundup Ready soybeans
in Brazil, where Monsanto is waiting for two appeal judges to decide if
that can be done. The lead judge already has given his approval. The company
expects a decision soon, with the goal of planting Roundup Ready soybeans
in Brazil in October, Mr. Verfaillie said.

If that approval comes, it would open up the Latin American market for
Roundup Ready corn, Mr. Verfaillie said. It also would put added pressure
on European and other countries to approve biotechnology, he said.

Monsanto is 85%-owned by drug maker Pharmacia Corp. (PHA, news, msgs)
of Peapack, N.J., which plans to spin off the stake in the fourth quarter.

Biotech giants Monsanto and DuPont signed a deal yesterday [Tuesday]
to put to rest the long-standing 11 lawsuits between them over GM seeds.

The bitter dispute started in the early 1990s, early days for the biotech
industry, when DuPont's subsidiary Pioneer Hi-Bred International, the largest
seed company in the world, first used the genes produced by Monsanto to
develop Roundup Ready soybeans and insect-resistant corn.

Monsanto, a newcomer with its yet unproven GM crops, needed to interest
Pioneer in order to get its genes into the most popular varieties of corn
and soybeans. With this in mind, the company allowed Pioneer access to
the genes in return for small payments and no royalties.

When the GM crops proved popular, this policy proved problematic for
Monsanto, and sparked a long running battle for payment of royalties.

The out of court settlement made yesterday will allow Pioneer to keep
selling Roundup Ready soybeans, but from now on it will have to pay a royalty
to Monsanto for access to certain genes and technology.

Pioneer meanwhile will gain licenses in exchange for the royalties,
to give the company market access for Roundup Ready corn (put on sale by
Monsanto) and another corn both companies are developing, which is resistant
to rootworm.

Howard L. Minigh, a group VP for agriculture and nutrition at DuPont,
told the New York Times that the deal proved how "'intellectual property
disputes in our industry can be resolved by ways other than long, drawn-out
legal processes".

The financial details of the settlement have not been disclosed, but
company executives did reveal that no payments would be made for past damages.